Governor of the Bank of Israel Prof. Stanley Fischer today reiterated his forecast that Israel's GDP will grow by 3.5% in 2010, following the strong growth figures released by the Central Bureau of Statistics yesterday. Fischer spoke in Jerusalem at a convention of the Conference of Presidents of Major American Jewish Organizations, and said that Israel would be able to cope with the ballooning deficit created by the crisis. He called the recession in Israel a "good recession" because it was short and shallow compared with the recessions in the rest of the Western world.
Fischer said that the Bank of Israel's 2010 growth forecast was contingent upon the global economic recovery continuing, since exports account for 40% of Israel's GDP. He added that Israel succeeded in coping well with the recession because of its rapid growth during the preceding years - an average of 5% annual growth in 2003-08 - and because Israel's banking system is sound.
"The banking system is conservative," Fischer said. "In Israel, it's hard to obtain a mortgage of more than 70% of the value of an apartment, in contrast to the US, where people obtained mortgage of 110% of the value of a home. People complained, but it turns out to have worked in our favor. It's also easier to supervise seven banks, compared with the 8,000 banks in the US."
Fischer took the opportunity to express a personal opinion about Israelis, saying, "It took me time to understand the Israelis, how they are proud of their overdrafts."
Fischer also said that Israel's rapid growth during the years preceding the crisis took him by surprise, despite all the problems that cropped up. "What surprised me? The solid growth," he said. He went to list the obstacles that the economy had overcome. "The collapse of Prime Minister Ariel Sharon, the rise of Hamas to power, the Second Lebanon War… there was a string of incidents. But the economy overcame them all. The economy matured and distinguished between the economy and political events."
Fischer did not spare criticism of Israel, either. He lambasted the bureaucracy, which he called "inefficient" and "difficult". He commented on the shaky condition of the education system compared with other OECD member states, and said that in view of the "frightening" increase in car sales, it is necessary to upgrade infrastructures.
Published by Globes [online], Israel business news - www.globes-online.com - on February 17, 2010
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